By Ronnie Harui

The yen fell to a 40-year low against the dollar in Asia on Tuesday, putting traders on high alert for potential currency intervention by the government.

Japanese Finance Minister Satsuki Katayama on Tuesday renewed her pledge to stop excessive yen volatility. "We will take appropriate action on currencies at any time as needed," Katayama said at a news conference. "During the recent online meeting between the Japanese and U.S. finance chiefs, we confirmed that taking decisive steps is included" as an option, she added, suggesting that the Japanese government could step in to prop up the yen.

The yen was recently 0.1% lower at 162.14 per dollar after earlier touching 162.40, the lowest intraday level against the greenback since 1986, FactSet data showed.

"The JPY's weakest level in 40 years is attracting attention," said Philip Wee, senior foreign-exchange strategist at DBS Group Research, in commentary. "The JPY could get some relief if Fed Chair Kevin Warsh, amid lower energy prices, dilutes the latest hawkish [Federal Open Market Committee] dots to make his case against forward guidance at the European Central Bank Forum in Sintra tomorrow," Wee added.

Japan has struggled to stem persistent weakness in the yen. Finance ministry data showed that Japan spent a record 11.7349 trillion yen, or about $72.47 billion, on currency intervention between April 28 and May 27. But that only offered temporary relief, with the selloff starting again as risk appetite returned on easing tensions in the Middle East.

Observers said that market forces pressuring the yen appear to have led Japanese authorities to move the line in the sand that would prompt them to defend the yen to 162 against the dollar.

Signs that U.S.-Iran peace talks would resume Tuesday and Wall Street's tech-led rebound overnight buoyed risk-on sentiment, which tends to weigh on safe-haven currencies such as the yen. Also, prospects for a slow pace of interest-rate increases by the Bank of Japan compared with ongoing expectations of a rate hike by the Federal Reserve spurred further yen weakness while the dollar strengthened.

The weak yen is also stoking concerns around inflation in Japan. The country of some 123 million people relies heavily on imports of essentials such as food and energy. Crude oil and natural gas are priced in dollars, which become more costly for buyers such as Japan when their own currency falls in value.

Any sharp jump in import costs could compel the Bank of Japan to raise interest rates, potentially undermining the country's fragile economic recovery. At its June meeting, the central bank raised rates by 25 basis points to 1.0%, representing a 31-year high.

In energy markets on Tuesday, front-month West Texas Intermediate crude oil futures fell 0.5% to $70.38 per barrel and front-month Brent crude oil futures dropped 0.7% to $72.64 a barrel, ICE data showed.

Write to Ronnie Harui at ronnie.harui@wsj.com